Can the 360 Painting franchisor designate approved suppliers, including themselves or affiliates?
360_Painting Franchise · 2025 FDDAnswer from 2025 FDD Document
From time to time, Franchisor may designate approved suppliers, including itself or its affiliates, whose enumerated products or services shall be deemed to satisfy Franchisor's standards.
Unless otherwise required by Franchisor, or if Franchisor designates an exclusive designated supplier, Franchisee may purchase any and all products, supplies, Vehicles, equipment and tools from any available source, so long as such products, supplies, Vehicles, equipment and tools conform to the standards and specifications established by Franchisor.
If Franchisor designates itself as a supplier, Franchisor has the right to earn a profit on any items it supplies.
Franchisor and its affiliates may receive payments, discounts or other consideration from suppliers in consideration of such suppliers' dealings with Franchisee and/or the system of 360 Painting franchisees, and may use all amounts received by it without restriction.
Franchisor is not required to give Franchisee an accounting of supplier payments or to share the benefit of supplier payments with Franchisee or other 360 Painting franchisees.
Moreover, Franchisee acknowledges and agrees that Franchisor will not be liable for any losses (financial or otherwise) or damages including consequential or special damages, resulting from any delay in delivery or availability of any of the products or services designated by Franchisor.
Franchisee is responsible for verifying and ensuring the any products or services it uses in the operation of the Business comply with applicable law.
In the event that Franchisee determines that any product of an approved or designated supplier does not comply with applicable law, Franchisee may propose an alternate product or supplier in writing and Franchisor shall approve or disapprove such alternate product or supplier within 10 business days.
Source: Item 21 — FINANCIAL STATEMENTS (FDD page 56)
What This Means (2025 FDD)
According to 360 Painting's 2025 Franchise Disclosure Document, the franchisor has the right to designate approved suppliers, which can include themselves or their affiliates, for products or services that meet 360 Painting's standards. Unless the franchisor requires otherwise or designates an exclusive supplier, franchisees can purchase products, supplies, vehicles, equipment, and tools from any source, provided they meet the franchisor's established standards and specifications.
If 360 Painting designates itself as a supplier, it is entitled to earn a profit on the supplied items. Additionally, 360 Painting and its affiliates may receive payments, discounts, or other forms of consideration from suppliers based on the suppliers' dealings with franchisees or the 360 Painting system. The franchisor is not obligated to share these supplier payments with franchisees or provide an accounting of them.
It is important to note that 360 Painting will not be liable for any financial or other losses resulting from delays in the delivery or availability of designated products or services. Franchisees are responsible for ensuring that all products and services used in their business comply with applicable laws. If a franchisee finds that a product from an approved supplier does not comply with the law, they can propose an alternative product or supplier, which 360 Painting must approve or disapprove within 10 business days. This system allows 360 Painting to maintain quality control and potentially profit from the supply chain, while also placing responsibility on the franchisee to ensure legal compliance.